For a long time now, the housing market has felt tense.
Prices jumped.
Rates surged.
Many buyers hit pause and stayed there. January’s data suggests something is finally loosening.
According to the January 2026 market report from Zillow, affordability is improving. Not in a dramatic, headline grabbing way. In a slow, practical way that actually changes how buyers experience the market day to day.
Home Prices Are Softening
National home values have now declined for six straight months. That sounds alarming until you look at the context.
The typical U.S. home value is about $358,968. In January, prices slipped 0.4 percent from December. Over the past year, prices are still slightly higher, up about 0.2 percent.
This is not a crash.
It is more like a release valve.
After years of fast appreciation, prices are giving back a little ground and doing so gradually. That kind of adjustment is far healthier than a sudden drop.
Monthly Payments are Everything
If you ask most buyers what really determines whether they can move forward, it is not the list price. It is the monthly payment.
That is where this market is offering real relief.
The typical monthly mortgage payment on a U.S. home is now around $1,733, assuming 20 percent down and excluding taxes and insurance. That payment is roughly 8.4 percent lower than it was a year ago. The main reason is lower mortgage rates.
This is an important shift. Even small changes in rates can have an outsized impact on affordability. Buyers may still be looking at high prices, but the cost to carry the home each month is finally coming down.
Inventory Is Slowly Rebuilding
January ended with about 1.11 million homes for sale nationwide. That is about 6 percent more inventory than this time last year.
There was a slight dip from December, which is normal for winter. What stands out more is the jump in new listings. New for sale homes were nearly 55 percent higher than in December, even though they were still down compared to last year. Severe winter weather likely kept some sellers on the sidelines.
For buyers, the takeaway is simple. There are more choices than there were a year ago. And that changes behavior on both sides of the transaction.
Buyers Are Taking Their Time
Homes are no longer flying off the shelf.
In January, the median home took 47 days to go pending. That is eight days longer than last year and four days longer than in December. Those extra days matter. Buyers have more time to think, to negotiate, and to walk away if something does not feel right.
Pricing tells the same story. About 22 percent of listings had a price cut in January. Fewer homes are selling above list price, with just over 22 percent closing higher than asking. That share continues to trend lower compared to last year.
The market is still moving, but it is no longer forgiving unrealistic pricing.
Closed Sales Dips, but Pendings Increase
Closed sales dipped in January, which is typical for this time of year.
About 219,600 homes sold nationwide. That is down 4 percent from last year and much lower than December due to seasonality. The more interesting signal is what is happening beneath the surface.
Homes going under contract are actually rising. Newly pending listings were up nearly 2 percent from a year ago and more than 20 percent higher than in December. Buyers may be cautious, but they are not gone. They are watching, waiting, and slowly stepping back in.
Rent Growth Continues to Cool
Renters are seeing relief as well, although it is modest.
The typical U.S. rent is about $1,895, up just 2 percent year over year and nearly flat month to month. Almost 39 percent of rental listings offered concessions in January, such as discounts or free rent.
Slower rent growth helps ease shelter inflation, which plays a major role in the broader economy. Over time, that feeds back into housing affordability in a meaningful way.
San Diego Follows a Similar Trend
San Diego follows the same pattern, just at a higher price point.
The typical home value in San Diego is around $905,983. Prices dipped slightly from December and are about 2 percent lower than a year ago. Inventory is up roughly 5.7 percent, while sales are down just over 9 percent. Rents remain high, with a typical rent near $2,871, but annual rent growth has slowed to about 1.3 percent.
Even in a market as competitive as San Diego, buyers are seeing more balance. Homes are sitting longer. Price reductions are more common. Negotiation is back on the table.
The Bigger Picture for 2026
After three years of historically low sales and stretched affordability, 2026 is shaping up to be a year of gradual improvement.
Inventory is rebuilding. Monthly payments are easing. Buyers are regaining confidence. Sellers are adjusting expectations.
It is not flashy.
It is not dramatic.
But it is meaningful.
And in real estate, the most important shifts often happen quietly before they show up in the headlines.
If you're curious what's happening in your neighborhoor or about your home's valuation, reach out to me at 858-335-4597. I'm always happy to chat.
Until next week's edition of San Diego Housing Market Mondays - Have a great week!
